Next stage focuses on dam project costs

The second phase of the plan to build a major dam in Central Hawke's Bay is about to start and will nail down the total cost of the project as well as who its customers and investors could be.

Hawke's Bay Regional Council met yesterday to hear an update on the project from its chief executive Andrew Newman, which included how the multi-million dollar investment would be made accountable to the public.

"The next stage will be looking at the costs and who the real customers are; assuming it can be built and authorised, what conditions can it be operated under.

"We will also look at how we can finance it; it is going to require an assortment of investors. That's what the task is."

Mr Newman said the project was the largest in the council's tenure and one of the biggest in the region for a number of years.

"The complexity is not to be underestimated.

"Getting it up and going, or not, will have consequences either way. My view is that the quicker you get it into a position where you know you can or can't do it, the better because it will override uncertainty.

"In a longer process there are more chances of having arguments relitigated and the people who started the journey may be long gone by the time you get there, if you get there at all."

Councillor Ewan McGregor said he was worried about comments he had fielded which suggested there wasn't interest from farmers who would want to buy water from the dam.

Mr Newman said there had not been a clear opportunity to speak with potential buyers prior to the council's decision to apply for a resource consent to build the dam.

"We are now at that point and we can have that conversation at a higher level than the previous three years.

"It will be the finance advisers and accountants who will be best placed to have that conversation with individual farmers.

"I'm not of the view we have to have regional council staff doing front-end negotiations around those issues."

Councillors also wanted to know what impact work on the dam project over the next 12 months would have on the workload of its staff and if there were likely to be any increases to rates, mindful of the $80 million of public money earmarked for the initiative.

The council heard about $500,000 would be spent during the 2012/13 financial year. But councillors wanted a more definitive set of accounts to demonstrate the investment company's work over the next year.

They also wanted reassurances the council's regular business operations wouldn't suffer if staff were required to leave their normal tasks to work on the dam project.

Councillor Christine Scott added to Mr Newman's recommendations, by asking for council staff to develop a reporting template which would monitor the impacts of the water storage project on the council's "function and cash flows".